The British interference in Indian matters began in 1765 with the claim of ‘Diwani rights’ acquired after their victory in the Battle of Buxar. Following this battle, the East India Company transformed from merely a trading entity into an administrative authority. The British government enacted several acts initially to oversee the East India Company and subsequently for the administration of India. Nevertheless, none of these measures met the aspirations of the Indian populace, primarily because they were enforced by a foreign power seeking to serve its own interests. All constitutional changes leading up to independence were imposed on Indians, with their viewpoints consistently overlooked in these developments.

The period from 1773 to 1858 was governed by company regulations, after which direct rule by the crown continued until 1947. The British implemented a range of constitutional and administrative modifications through these acts. While their intention was to uphold British Imperial ideology, these changes ultimately contributed to the introduction of democratic elements and the modern state into India’s political and administrative framework.

Regulating Act of 1773 Background

The Act was enacted for several reasons: 

• Financial Struggles: The East India Company was facing severe financial difficulties. The company held significant importance for the British Empire due to its trading monopoly in India and other eastern territories. Numerous prominent individuals were shareholders in the Company. The Company made annual payments of £40,000 to the government to uphold its monopoly; however, it had failed to fulfill its obligations since 1768. In 1772, the company requested a loan of 1 million pounds from the British government. As a result, the British government resolved to implement measures to oversee the company’s operation. 

• Inefficient Dual System: The dual system was established by Robert Clive following the British victory at the Battle of Buxar in 1764. In this system, the Nawab of Bengal held Nizamat rights, which included judicial and political authority, while the company retained the Diwani rights, giving it control over revenue. However, neither the Nawab nor the company’s officials showed genuine concern for administration, leading to neglect of the welfare of farmers and the general populace. 

• Insufficient Administration: Numerous accusations of corruption and favoritism were directed at the company officials. The poor management of Bengal significantly contributed to the Great Bengal famine of 1770. Furthermore, during this crisis, the company failed to take any effective measures to alleviate the situation for the people, such as lowering taxes. A large number of individuals died during the famine. 
• Defeat Against Mysore: The company’s forces suffered defeat at the hands of Hyder Ali in the First Anglo-Mysore War. 

Regulating Act of 1773 Key Provisions

Below are some provisions of the regulating act mentioned:

• Designation: The Act modified the title of the Governor of Bengal to Governor General of Bengal, with Warren Hastings being appointed as the inaugural holder of this position. 
• Executive Council: A four-member Executive Council was established to support the Governor General of Bengal in his duties. 
• Centralization of Power: The Governors of Bombay and Madras were placed under the authority of the Governor-General of Bengal, which reduced their autonomy. 
• Supreme Court Establishment: A Supreme Court was founded in Calcutta, consisting of one chief justice and three additional judges. It held civil and criminal jurisdiction exclusively over British subjects, excluding Indian natives. 
• Prohibition on Private Trade: The Act prohibited company officials from participating in private commerce or accepting bribes and gifts from the native population. 
• EIC Accountability: It required the Company’s governing body, the Court of Directors, to report all its official activities to the British Government, covering revenue, civil, and military matters. 

Regulating Act of 1773 Significance

Below are the key significance of the Regulating Act 1773, which was one of the crucial steps in the formation of Britain’s governance in India.

• Company affairs regulation: This was the initial action taken by the British Parliament to oversee and manage the operations of the East India Company. 
• Centralized governance: It established the groundwork for a centralized administration in India by placing the Governors of the Bombay and Madras presidencies under the authority of the Governor-General of Bengal. 
• Formal acknowledgment: This marked the first time that the company’s political and administrative roles in India received official recognition.

Regulating Act of 1773 Challenges and Issues

Here are the major challenges and issues of the Regulating Act of 1773, focusing on its limitations and shortcomings.

• No veto power: The Governor General lacked any veto authority within the Executive council. 
• ill-defined powers: The powers of the Supreme Court were vaguely defined. 
• Lack of coordination: There was a lack of coordination, as the Governors of Madras and Bombay chose not to obey the directives of the Governor-General of Bengal, notably during the First Anglo-Maratha War (1775-82). 
• Turned out to be ineffective: The system proved to be ineffective since no process was in place to review the reports submitted by the Governor-General in Council. Therefore, the intended parliamentary oversight of the company’s activities failed to materialize, and the act did not succeed in curbing corruption among company officials.  

Amending Act of 1781

This legislation was enacted by the British Parliament on July 5, 1781, to rectify the shortcomings of the Regulating Act of 1773. It is also referred to as the Act of Settlement, 1781. The primary issue stemming from the Regulating Act was the conflict between the Supreme Court and the Governor General in Council. To resolve this conflict, the act clarified the relationship between the Supreme Court and the Governor General in Council. Many of the Supreme Court’s powers were reduced in favor of the Governor General in Council. 

Provisions of Amending Act of 1781

Several clauses of the act reduced the court’s authority by allowing exemptions and limiting its jurisdiction:  

• Official function: Activities performed by the Governor-General, its Council, and Company employees in their official roles were exempt from the Supreme Court’s jurisdiction. 
• Revenue matters: All issues concerning revenue were also excluded from the court’s jurisdiction. 
• Appellate Jurisdiction: The appellate authority of the court was diminished. Appeals from the Provincial Courts could be directed to the Governor-General-in-Council rather than the Supreme Court. 
• Regulatory power: The act granted the Governor-General-in-Council the authority to create regulations for the Provincial Courts and Councils. 
• Defined Geographical Jurisdiction: The court’s geographic jurisdiction applied to all residents of Calcutta. Hindus would be tried under Hindu law, while Muslims would be tried under Mohammedan law.